The government is aiming for economic growth of 7.5% in 2012, Wen said -- lower than the 2011 goal of about 8%. The Chinese economy often exceeds the official objective; last year it grew 9.2%.

"Even though China only lowered its target by half a percentage point, it's a telegraph to the rest of the world that the second largest economy is slowing," said Tom Schrader, managing director at Stifel Nicolaus.

China's lower forecast also suggests that the country's recent steps to ease monetary policy -- in an effort to maintain strong economic growth while getting inflation under control -- may not be working, said Schrader.

Aluminum-maker Alcoa (AA, Fortune 500) and Caterpillar (CAT, Fortune 500), which makes construction equipment, were the biggest laggards in the Dow amid worries that slower growth in China could pressure demand for their products.

Trading could be choppy this week, leading up to a big news day on Friday. On the domestic front, investors will get the latest snapshot of the U.S. labor market, with the release of the February jobs report.

In Europe, Friday marks the deadline for private creditors to sign off on Greece's debt write-down. Greece needs the debt deal to secure its €130 billion rescue package from the eurozone and avoid default.

Last week, the ISM manufacturing index for February slipped to 52.4, from 54.1 in January, indicating a slowdown in the sector's expansion.

Meanwhile, factory orders in January decreased 1% -- less than the 1.9% decline analysts were expecting. Factory orders rose 1.4% in December.

Companies: IBM (IBM, Fortune 500)shares hit all-time high above $200 share. Citigroup (C, Fortune 500) announced that it is exploring possible uses for Watson, IBM's supercomputer that was famous for beating two human contestants on the game show "Jeopardy" last year.

Online reviews site Yelp (YELP) retreated, falling more than 14% after spiking 64% to top $24 a share in their debut on the New York Stock Exchange Friday.

AOL (AOL) became the latest advertiser to pull advertising from Rush Limbaugh's radio show in response to his comments about a Georgetown law student who advocated healthcare coverage for contraception. AOL shares were flat Monday.

BP (BP) shares were higher Monday, after the British oil giant and plaintiffs involved in the legal battle over the Gulf of Mexico oil spill said Friday they reached an agreement. BP estimated it would have to pay about $7.8 billion in the Deepwater Horizon disaster settlement.

Apple (AAPL, Fortune 500) said in a post on its website that the tech company has "created or supported" some 514,000 jobs in the United States, either through direct employment, the "App economy" or other means. Shares were down more than 2%, however, ahead of the company's highly-anticipated iPad announcement Wednesday.